posted at 2:41 pm on December 3, 2012 by Mary Katharine Ham

The gist: The federal government hounded a family over a modern work of art for years because it featured a stuffed bald eagle. The eagle was killed and stuffed long before a 1940 law that outlawed its killing, but the law then made the sale of such an eagle illegal. The work of art—”Canyon” by Robert Rauschenberg— therefore became technically worth zero. Several knowlegdable appraisers agreed, leaving the family with no tax liability for a work of art they couldn’t legally sell. The IRS disagreed, sending them first a $29 million tax bill plus a $11.2 million penalty for allegedly “undervaluing” the art.

“Canyon” by Robert Rauschenberg

“Canyon” was part of an inherited art collection on which the heirs had already paid hundreds of millions in estate taxes by selling many works of art. Now, “Canyon” has been donated to the Museum of Modern Art, with no charitable deduction taken. That was the only option available to them to escape the IRS bill, but as Eric Gibson’s account suggests in the Wall Street Journal, I’m not sure the government would have stopped after getting $29 million.

Only in the fantasy bazaar of the U.S. government’s imagination can an item that is worthless carry a multimillion-dollar price tag.

Ms. Sundell and Mr. Homem had another option: donate “Canyon” to a museum. But since they were declaring that it had no value, they would have to forfeit the charitable deductions that normally accrue to individuals in such cases. In the end, this is what they chose to do. “Canyon,” which had been on extended loan to the Metropolitan Museum of Art, now joins five other Rauschenberg combines at MoMA. In exchange, the government has dropped its $40 million-plus claim against Sonnabend’s estate.

“Canyon” had, in fact, been in the feds’ sights long before this particular debacle. According to a New York Times story last summer, in the early 1980s the combine had caught the attention of the United States Fish and Wildlife Service, which tried to seize it from Sonnabend.

A deal was struck allowing her to keep possession as long as the work remained on public display. The issue resurfaced a few years later. In 1988, Rauschenberg himself had to submit a notarized letter stating that the eagle had been killed and stuffed by one of Teddy Roosevelt’s Rough Riders long before the 1940 law went into effect.

Gibson also wonders what future public policies and bans— Hello, Bloomberg!— might do to the value of works of art “like Damien Hirst’s ‘Cremation,’ one of four ‘ashtray sculptures’ the artist made in the late 1990s and described on his website as composed of ‘. . . cigarettes, cigarette packaging, tobacco packaging, cigarette papers, matches . . . and ash,'” possibly casting it and others like it into “market limbo.”

Certainly, this high-profile incident, and the estate taxes required to keep any inherited artwork, are enough to make some collectors and benefactors think twice about investing in art, which is a shame. Cue the liberals: That’s why NEA funding it so vital! Nice how this racket works, huh?

The silver lining: “Canyon” has found a home in the Museum of Modern Art, which is run by a private non-profit and “eschews government funding.” You can donate to MoMA, here. I’d like to see it at least stay there, instead of ending up in the IRS lobby one day. The eagle is the agency’s symbol, after all.